Division A manufactures electronic circuit boards. The boards can be sold either to Division B of the same company or to outside customers. Last year, the following activity occurred in Division A:

Selling price per circuit board	$	184
Variable cost per circuit board	$	126
Number of circuit boards:
Produced during the year		20,600
Sold to outside customers		14,800
Sold to Division B		5,800

Sales to Division B were at the same price as sales to outside customers. The circuit boards purchased by Division B were used in an electronic instrument manufactured by that division (one board per instrument). Division B incurred $280 in additional variable cost per instrument and then sold the instruments for $630 each.

Required:

1. Calculate the net operating incomes earned by Division A, Division B, and the company as a whole.

2. Assume Division As manufacturing capacity is 20,600 circuit boards. Next year, Division B wants to purchase 6,800 circuit boards from Division A rather than 5,800. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the 1,000 additional circuit boards to Division B or continue to sell them to outside customers?

Calculate the net operating incomes earned by Division A, Division B, and the company as a whole.

	Division A	Division B	Total Company
Sales
Expenses:
Added by the division
Transfer price paid
Total expenses	0	0	0
Net operating income	$0	$0	$0

Assume Division As manufacturing capacity is 20,600 circuit boards. Next year, Division B wants to purchase 6,800 circuit boards from Division A rather than 5,800. (Circuit boards of this type are not available from outside sources.) From the standpoint of the company as a whole, should Division A sell the additional 1,000 circuit boards to Division B or continue to sell them to outside customers?

Check one (multiple choice)

A. Continue to sell the additional 1,000 circuit boards to outside customers.

B. Sell the 1,000 additional circuit boards to Division